Wednesday, August 5, 2009

Federal & State politicians

Over at Thoughts on Freedom John Humphreys has been looking at ways of getting higher quality politicians into State parliament. The Commonwealth has the glamour of national and international power so attracts the more talented and ambitious. State politics are about bread and butter matters; transport, schools, hospitals etc. More mundane and less appealing but still very important.

He suggests that Federal politicians should have to work their way up through State politics first. This is supposed to weed out incompetents. In my view it would have the complete opposite effect , by putting more hurdles in the way of competent people many would just give up and do something else. What impresses me about the American system is that while their parliamentarians seem no better then ours, they do get good people at the executive level. Many of those leaders have no previous government experience, but their former careers provide them with the skills to be effective leaders, President Eisenhower and Gov Reagan come to mind. At the moment Meg Whitman, former CEO of eBay is making a run for California governor, if an Australian top executive , say Gail Kelly, wanted to be NSW premier, she would have far more hoops to jump through.

Its a matter of incentives. Look at executives in the private sector. Their salary package would be considerably bigger then a politicians' but would be tied to their performance. Importantly they usually receive shares not just cash, making their total wealth very much dependent on their company's performance.

In contrast a politician is paid for simply being elected. Their salary s not dependent on their achievement, even if they become a minister, an incompetent minister is paid the same as a good one. Hang in their long enough and you get the big prize, the superannuation pension. After 14 years in State parliament Reba Meagher was able to resign at age 40 on a $120,000 a year inflation adjusted pension for life. Politics is a great opportunity for ambitious mediocrities.

Heres is my suggestion. We live in a society that can create financial securities from carbon emissions, so can we create securities for good government? Social Policy Bonds proposals have been around for years. Bonds would be issued to be redeemed for cash if certain goals were met, ie low unemployment, low inflation high economic growth, effectiveness of state enterprises etc. Have a balanced score card approach with redemption price increasing for outstanding achievement. Then abolish pollies super and give them Good Government Bonds instead. Be generous , I'm happy for them to be multi millionaires if they do good, but they would have to preform.